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Coronavirus Victoria: Riots, conspiracy theories and digital cowboys: welcome to 2021


An electoral boundary redistribution this year will reflect population growth in the newer more ALP voting suburbs and thus make the opposition’s task even harder, contributing to their poor morale and lack of motivation. The Andrews’ government’s progressive social agenda – Treaty, injecting rooms, social housing, wage justice – will be matched by an aggressive job creation push led by construction of infrastructure and a return of international students.

The opposition had its Tim Smith problems in 2020 but the long overdue collapse of the Trump cult has presented Michael O’Brien with a new challenge – called Bernie Finn. A senior member of the Liberal Party, he is still the Upper House Whip and heads their ticket for the Western Metropolitan Region. Finn is an unapologetic, fully subscribed sword-carrier of the fanatical right and refuses to budge from his God-given agenda.

Liberal Upper House MP Bernie Finn.

Liberal Upper House MP Bernie Finn. Credit:Jason South

It is not at all clear if Finn can be purged from the Liberal’s Upper House ticket. Only State Council can suspend an MP, but with COVID restrictions, there is no meeting planned. He cannot be easily removed as the Whip either. Andrews cannot believe his luck.

The crossbench – the independents – in the Upper House led by the strategically and tactically canny Fiona Patten can censure Finn using their own procedures. The government will watch with bemused interest but will wisely let others do the heavy lifting. It would not look good during a pandemic for a government to devote energy to a sideshow.

With his whacko federal colleagues, George Christensen and Craig Kelly, they are a gift to the ALP every time they surface. Anyone hitched to the toxic Trump brand is now electoral poison.

Illustration of Premier Daniel Andrews.

Illustration of Premier Daniel Andrews.Credit:Matt Davidson

How can any sensible politician endorse the violent acts of enraged lawless vandals, rallying under the Confederate flag or wearing ‘Camp Auschwitz’ logos and other slogans even more offensive than that on their shirts? The Confederate flag represents slavery and lynching. Bizarrely, Trump himself eventually criticised the rioters but here in Australia some of his supporters will not!

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Trump has consistently destroyed relationships with everyone he works with. The casualty list from his theatrically inspired single failed term in the White House is staggering. Now those voters who stormed the seat of constitutional power at his urging are left abandoned too. Their anger over a “stolen” election is compounded at now being betrayed by their figurehead.

It turns out it was all for nothing. They too were taken in by the greatest conman of our generation. The damage to their self-regard, to say nothing of the international reputation of the USA, will take years to repair.

Protesters inside the Capitol building.

Protesters inside the Capitol building.Credit:AP

Many of the mob who trashed the Capitol were astonished that they got into trouble for their “patriotism”. This can only be explained by a super-charged sense of entitlement. To be indignant that riotous behaviour is met with even half-baked law enforcement proves a detachment from reality typical of a cult. Four years of appeasing Trump and excusing his outrages inevitably led to this. If you start a fire, do not feign surprise when it gets out of control.

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The far-right became a party within a party in Australia too. Appeasement leaves them empowered, and shows the impotence of moderates within Liberal ranks. Do not negotiate with terrorists, even digitally savvy ones.

Until we strip anonymity from the digital world and force trolls and their profiteering publishers in social media to be as accountable online as they are in every other realm then democracy will continue to be under siege.

The confines of cyber-space anonymity enables people to perform the role of their evil twin. This week again police were pressing charges against keyboard warriors making death and other threats against local politicians including the Premier and Fiona Patten.

Reason Party leader Fiona Patten.

Reason Party leader Fiona Patten.Credit:Photo: Paul Jeffers

Facebook, Twitter and other providers of what have become essential services cannot be allowed to become a law unto themselves. Self-serving pleading for special treatment simply must be rebuffed. Our freedom has turned out to be the Achilles heel of modern Western capitalism. Our openness is being maliciously exploited by those who seek to undermine it.

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This is a global challenge. So far, Australia has been at the forefront of initiatives to rein in the digital cowboys, somewhat ironically at the urging of an anxious Murdoch media empire. They see their near monopoly in this small but influential market under threat. There may be a tiny opportunity here for the now ex-pat media mogul to just this once achieve something that is both in his and the public’s interest at the same time.

Jon Faine is a former presenter on ABC Radio Melbourne.

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Markets Live, Wednesday 13 January, 2021


Crude oil approached an 11-month high as the dollar weakened following a three-day rally.

The mood across markets wasn’t overly negative as investors assess how the rise in Treasury yields changes the financial landscape. While progress on a vaccine gives reason to be hopeful, there are lingering concerns over the speculative excess and froth that’s driven stock markets to all-time highs in the middle of a pandemic.

“What I think investors are most focused on is the digesting of what is shifting fiscal policy,” said David Bianco, chief investment officer of the Americas at DWS Group. “We’re beginning to lose the anchor on some long-term key benchmark interest rates.”

Yields on Treasury 10-year notes pared an earlier rise after a government auction of $US38 billion of the securities was met with solid demand. The spread between the rate on the two- and 10-year notes had risen every single day this year as investors bet on additional US fiscal stimulus, spurring more bond issuance and higher yields on longer-maturity Treasuries.

In Washington, the House was set Tuesday to issue a largely futile ultimatum to Vice President Mike Pence demanding he invoke constitutional authority to remove President Donald Trump from office, as a prelude to an expected vote to impeach the president for the second time in little more than a year.



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Markets Live, Tuesday 12 January, 2021


Good morning all, and welcome to Markets Live.

A soft start is tipped for the ASX 200 after Wall Street pulled back overnight.

Alex Druce is in the chair today. Flick him a comment if you spot something noteworthy, or drop him a line at a.druce@smh.com.au.

This blog is not intended as financial advice



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Prepare for a research boom in 2021


Biotech companies of all sizes had long resisted the  government’s plan to “retarget” the incentives scheme, including stricter caps on refunds and offsets. When they simplified these changes in the October budget, it resulted in billions flowing back into the system and companies like ResMed believe they will benefit.

“Under the new rules, ResMed will benefit from an incremental tax offset of 16.5c per additional dollar spent on R&D – up from 8.5c under the prior rules,” Mr Sandercock said. ResMed has long argued that changes to the incentives will boost Australia’s competitiveness on a global scale.

“Now more than ever, Australia needs to be seen as an attractive place for international businesses to invest.”

Cochlear had also lobbied hard for a rethink of the federal government’s research and development tax offsets scheme.

Mr Howitt said the change in caps for eligible expenditure will lead to Cochlear getting increased rebates once those changes come through.

“We will invest this rebate in growing the business,” he said.

Chief executive of lobby group AusBiotech, Lorraine Chiriou, said uncertainty over the research offsets policy in recent years has tempered enthusiasm for investments.

“All Australians – from bench, to business, to bedside – will benefit when this declining trajectory is reversed. Supporting [research] supports the country’s overall GDP, and will facilitate an environment that encourages businesses to invest in additional R&D to retain and grow Australian innovation,” she said.

Investors and industry experts says the Australian government should also brace for an increase in research and development tax incentive claims over the next two years as research investment and pent-up demand from trials paused throughout the pandemic leads to a boost in projects.

Managing partner of Australian venture capital firm OneVentures, Dr Paul Kelly, believes policymakers should be preparing for an increase in claims for offsets from biotech companies in the coming years.

“There have been delays in clinical trials, including across borders. There is going to be significant catch-up in 2021-2022,” he said.

When considering the price tag of that research to governments, however, the flow-on effects of this research have to be considered, he said.

“That substantial increase is also funding jobs and increasing expertise. The contract research organisations are really doing very well out of this.”

Prime Minister Scott Morrison at the University of Queensland. Medical research has been front and centre throughout the COVID-19 pandemic.

Prime Minister Scott Morrison at the University of Queensland. Medical research has been front and centre throughout the COVID-19 pandemic. Credit:Darren England/AAP (pool)

In the 2020 financial year, reported spending across the top 10 ASX-listed companies by market cap was $1.9 billion, up from $1.7 billion in 2019.

This is led by blood plasma giant CSL, which spent $US921.8 million ($1.3 billion) in 2020. CSL, which has a broad pipeline of research projects including its work on coronavirus treatments, told investors last year it expects to spend between 10 and 11 per cent of its revenues on R&D into the next year.

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Australia’s research and development incentives scheme has also proved critical for small cap biotechs and unlisted firms, because many are yet to generate any revenue and receive direct refunds or cash offsets for their spending.

For businesses in the commercialisation stage, these refunds ticked upwards in 2020. COVID nasal spray developer Starpharma received a $5.7 million refund for costs over the past financial year, up from $4.9 million the year prior.

Cancer imaging startup Telix Pharmaceuticals reported a $5.8 million offset for the half, up from $5.3 million the same time last year.

Cash has been splashed throughout 2020 in hopes that Australia’s medical research prowess can help power the post-COVID economic recovery, particularly in Sydney and Melbourne.

When asked whether there will be greater scrutiny over research tax claims amid as R&D accelerates, a spokesman for the department of industry, science, energy and resources said the onus was on companies to ensure any claims they made were for genuine research activities.

“The department will continue to take a risk-based approach to reviewing applications and may examine registrations to ensure they comply with the eligibility requirements of the program, in line with standard practice,” they said in a statement.

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Coronavirus concerns push Australian Formula 1 Grand Prix to late 2021, says Aston Martin owner Lawrence Stroll


The Australian Grand Prix will be postponed to the back end of the Formula 1 season with Bahrain replacing it as the opening race in March, according to Aston Martin team owner Lawrence Stroll.

The move, due to the COVID-19 pandemic and quarantine restrictions, has been widely flagged in the media but is yet to be confirmed by Formula 1 or local organisers.

“Melbourne has been — it’s not officially announced but it will be — not cancelled but postponed,” the Canadian billionaire told Reuters.

“We will go there sometime in the fall [northern autumn] and the first race will be [in] Bahrain.”

Formula 1 has been promoting on social media the existing 2021 schedule, which has the season starting with the Melbourne race on March 21.

However, there has been speculation that current restrictions requiring international arrivals in Australia to undergo a two-week hotel quarantine period would make it logistically difficult to get F1 teams and support staff in place in time to allow the race to proceed.

Earlier this week, the Australian Grand Prix Corporation said it was working closely with the Victorian Government and Formula 1 on “conditions and arrangements relating to the staging of the Formula 1 Australian Grand Prix in Melbourne in 2021”.

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Last year’s race was cancelled just hours before the first Friday practice session was due to begin, due to coronavirus concerns.

Stroll was speaking ahead of the announcement of a new team title sponsorship with IT company Cognizant.

People queuing up for entry into the early sessions of the Melbourne F1 grand prix.
Crowds had to be turned away from Albert Park because of the last-minute cancellation of the 2020 Australian Grand Prix.(ABC News: Patrick Rocca)

Formula 1 teams agreed to the change in a virtual meeting with Formula 1’s new chief executive Stefano Domenicali on Monday.

Sources said the same meeting also agreed for pre-season testing to move from Barcelona’s Circuit de Catalunya to Bahrain, without setting a date.

Last season’s race calendar had to be re-written due to the global pandemic, with an eventual 17 rounds in Europe and the Middle East and some circuits including Bahrain hosting two Grands Prix.

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Stroll, also executive chairman of sportscar maker Aston Martin — which is returning to F1 as a constructor for the first time in 60 years in a rebranding of the Racing Point team — said he expected lingering difficulties.

“I do believe we’re in for a difficult two or three months,” said Stroll.

“There is a light at the end of the tunnel with the vaccine. I think the first few races will be slightly challenging.

“But Formula 1 management and the FIA, I really take my hat off to them to deliver 17 races as we did last year in 23 weeks, without really any major hiccups, in a very impressive manner.

“I think the worst is behind us and we’ve learnt through last year how to proceed with this year.”

Stroll and his son Lance, who drives for Aston Martin, both tested positive for the virus last year.

Reuters/ABC



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Markets Live, Friday 9 January, 2021


US House Speaker Nancy Pelosi urged Trump’s immediate removal from office. President-elect Joe Biden accused Trump of fomenting violence and said Wednesday was one of the darkest days in US history.

“The market is now looking past Trump and it’s looking forward to a Biden presidency, more structure and stimulus,” said Dennis Dick, a trader at Bright Trading LLC.

“A Democratic Congress is going to obviously be more concerned about the small businesses, and the Main Street.”

Economy-linked financials rose 1.5 per cent while industrial and materials sectors hit new records on expectations Biden will line up a bigger fiscal package and boost infrastructure spending with Congress under Democrat control.

Rate-sensitive bank shares gained 2.6 per cent, tracking another surge in the benchmark 10-year US Treasury yield above 1 per cent.

Plain vanilla growth stocks, relatively speaking, are less likely to benefit from more stimulus spending, said David Bahnsen, chief investment officer of The Bahnsen Group in Newport Beach, California.

“Overall value-type stocks probably do better than growth,” Bahnsen said. “On the margin, if they’re going to go get another $US1 trillion and push bond yields higher and the slope of the yield curve steeper, banks are going to benefit.”

The S&P 500 technology index rose 2.7 per cent, more than making up for losses a day earlier when shares of some of the biggest technology companies dropped on fears of increased regulation.

The NYSE FANG+TM index, which includes the core FAANG group of stocks that have led the Wall Street rally from pandemic lows, gained 2.7 per cent.

The three major indexes on Wall Street closed at records and other indexes also hit fresh highs, including the small-cap Russell 2000 index and MSCI’s all-country world equity index, a gauge of global stock performance.

The Dow Jones Industrial Average rose 211.73 points, or 0.69 per cent, to 31,041.13, the S&P 500 gained 55.65 points, or 1.48 per cent, to 3,803.79 and the Nasdaq Composite added 326.69 points, or 2.56 per cent, to 13,067.48.

The number of Americans filing for jobless benefits unexpectedly dipped last week, while staying elevated, a Labor Department report showed, with the job market recovery appearing to stall as the COVID-19 pandemic threatens to overwhelm the country.

“With more stimulus coming, even if we do have a miss on claims, it’s going to be a little bit less severe, because we know there’s going to be a bigger back up for those who are recently unemployed,” said Max Gokhman, head of asset allocation at Pacific Life Fund Advisors in Newport Beach, California.

Investors are now awaiting a comprehensive December jobs report, which is expected on Friday.



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Markets Live, Tuesday 5 January, 2021


Only the S&P 500’s energy sector managed to eked out a gain.

The selling comes as coronavirus cases keep climbing at frightening rates around the world, threatening to bring more lockdown orders that would punish the economy.

The worsening numbers also raise the possibility that Wall Street has been overly optimistic about the big economic recovery it sees coming because of COVID-19 vaccines. Tuesday’s upcoming runoff elections to determine which party controls the Senate may also be contributing to the volatility.

“We’ve got a wobbly start to the year here,” said Lindsey Bell, chief investment strategist at Ally Invest.

“Investors are looking for a reason to lock in profits. The selling is probably a bit overdone.”

The S&P 500 fell 55.42 points to 3,700.65. The Dow Jones Industrial Average also fell from its record set last week, shedding 382.59 points, or 1.3 per cent, to 30,223.89. At one point, it was down 724 points. The tech-heavy Nasdaq composite lost 189.84 points, or 1.5 per cent, to 12,698.45.

Stocks also fell in Japan as officials there mull a state of emergency due to surging virus cases. But optimism was more prevalent in other markets, with European and most Asian indexes closing higher.

The United Kingdom has been hit particularly hard by a new variant of the coronavirus that appears to be more contagious. On Monday, the United Kingdom became the first nation to start using the COVID-19 vaccine developed by Oxford University and drugmaker AstraZeneca.

In the United States, regulators have already approved two other vaccines. China last week gave the green light for its first domestically developed vaccine. Others are also being tested.

Investors have been hoping that vaccines will allow daily life around the world to slowly return to normal. That’s helped spark a recent recovery for stocks of travel-related businesses, smaller companies and other industries left behind for much of the pandemic.

Still, rising coronavirus cases, the emergence of a mutant variant of the virus and concerns that the rollout of the vaccine isn’t happening fast enough are keeping investors on edge, said Adam Taback, chief investment officer for Wells Fargo Private Bank.

“The (virus), the severity of the impact it’s going to have during the winter, is still weighing on people’s minds,” Taback said.

Of course, many risks remain for the market, even beyond the threat of economic lockdowns coming in the near term because of the raging pandemic. Prices have climbed enough that critics say stocks may be too expensive, particularly if the big rebound in corporate profits that investors expect to occur later this year doesn’t materialise.

Politics is also still a wild card. If Democrats sweep the two runoff races in Georgia, that could lead to higher corporate tax rates, tighter regulations and other changes from Washington that would hinder corporate profits. Democrats already control the House, and President-elect Joe Biden is a Democrat.

“The concern around that is regulatory risk and tax policy risk are back on the table,” Bell said. “That has investors feeling a little bit anxious.”

But even in a Democratic sweep, markets see some causes for upside, including the potential for more stimulus for the economy. Democrats have been lobbying for $US2,000 payments to go to most individuals, for example.



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Markets Live, Monday 4 January, 2021


Equities bounced back with a vengeance following the plunge in March, with the Nasdaq, S&P 500 and Dow posting respective annual gains of 43.6 per cent, 16.3 per cent and 7.2 per cent.

“When you think about the year we’re glad it’s over, but it was also unbelievable in a lot of different ways,” said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina. “This is the first year in history that the S&P was down 30 per cent for the year at one point and managed to end higher.

“It is a good reminder for investors to have a longer time horizon and when bear markets arise they likely should be viewed as opportunities and not a time to panic, which is easier said than done,” Detrick added.



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Tensions with telcos and network gaps to challenge NBN Co in 2021


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The declaration of completion from the federal government is a crucial first step in paving the path for the privatisation of the NBN.

But there will be far sterner tests ahead before we get anywhere close to that process. There will be a Productivity Commission inquiry, the findings of which will be vetted by a parliamentary joint committee, and until the NBN Co can deliver reliable baseline speeds, ideally 50 Mbps across the entire network, both fixed and wireless, the full potential of the project will remain unrealised.

Using a mix of technologies to connect the homes to the network may have helped NBN Co meet its flexible construction timetable, but it has now left gaps in terms of the service many homes can receive.

NBN Co has, in theory, a fix for this, with $3.5 billion earmarked to provide around 6 million households with the option of accessing ultra fast internet speeds, including providing fibre-to-the-home connections at no charge to those homes that sign up for high-speed plans.

However, the upgrade process won’t be all about the money and will rely on effectively co-ordinating the workforce available to NBN Co. Given the current contention between telcos and NBN Co over whose shoulders the burden for botched NBN connections rest, the upgrade process is likely to pose its own set of complications.

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According to the telcos, there are still a high volume of faults and outages on the NBN side of the network, which leads to poor customer experience and, in turn, increases their cost to serve them.

Telstra, Optus and TPG also maintain they are paying NBN Co far too much for wholesale capacity. That’s despite the discounts and cuts offered by NBN Co, but as long as the CVC charge, which covers the amount of bandwidth telcos can make available to customers, remains in place, the telcos won’t stop agitating against it.

As a reseller of NBN services, the charge burns a hole in the profits of the big operators and even 5G mobile technology’s purported magic won’t be enough, at least in the short term, to staunch that bleeding.



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PM Scott Morrison warns Australia must stay vigilant in 2021


Prime Minister Scott Morrison says he feels optimistic about 2021, but has warned Australians must remain vigilant as the COVID-19 pandemic continues.

In his New Year video message, the Prime Minister said Australia had confronted its greatest challenge since World War Two.

“We’re a nation that prevails and we are making our way through this crisis in a very Australian way — guided by our own enduring principles and values that have served us so well, and together we have done better than almost any other country in the world,” he said.

Mr Morrison acknowledged Australia’s “indomitable” spirit, but said there were still a lot more challenges ahead in 2021.

“I have the hope and I have the optimism and the confidence in my fellow Australians — in you — about our country and our capacity to respond to whatever continues to come our way,” he said.

“This is not a faint or vain hope, but one based on our experience together, especially over this past year.

“We have worked together to save lives and save livelihoods. Every part of our country has stepped up.”

Mr Morrison specifically thanked all Australians who had sacrificed so much and served their country.

“From our health workers collecting test samples and tracing the contacts, tending to our elderly, counselling on our helplines and supporting our quarantine arrangements, ably assisted by our defence forces and our police and emergency service personnel,” he said.

The Prime Minister also acknowledged the broader community for complying with health orders, as well as struggling business owners.

“I know you’ve been struggling with the uncertainty that a pandemic brings, but you’ve been keeping your show together and pressing on,” he said.

“Our economic recovery plan will continue to get even more Australians back into work and restore their livelihoods driven by a business-led recovery.”

About 80 per cent of the jobs that were lost during the pandemic had already been recovered and 450,000 businesses had graduated from JobKeeper, Mr Morrison said.

The Prime Minister also noted the importance of an effective vaccine to help with Australia’s recovery.

“We must stay vigilant as we continue our comeback — a comeback that is now well underway despite the present challenges we face,” he said.

“A safe and effective vaccine validated, proven by our scientists, by our doctors, will be available to all Australians and will be a key step in our recovery in 2021.”



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